Wednesday, May 11, 2005

shafted.


The disadvantage that results to the middle income earners (such as me) can be seen clearly in the graph above.

As taxable income increases, the difference between the two income tax schedules (tax paid under the new minus tax paid under the old) as a percentage of total tax paid under the new schedule (yellow line) can be seen to steadily decrease as taxable income increases, until around the $58k mark.

After that it is fun times. Now that is an 'incentive to work', if I have ever seen one. Maybe one day, if I work really hard and sell my soul to the devil I could be one of those rich people.

I have also included tax 'relief' as a percentage of (a) net income uner the new system, (b) gross income.

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